Classroom Technology

Investors’ Advice to Ed-Tech Startups: Focus on Unmet ‘Gaps’ in Schools

By Sean Cavanagh — December 10, 2015 2 min read
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Cross-posted from the Marketplace K-12 blog

A group of investors in education companies appeared at a school-industry conference here on Wednesday, dispensing advice, not dollars.

The Education Business Forum, hosted by the Software & Information Industry Association this week, offered company executives, developers, and others guidance on a host of business strategies—from how to protect student data to how to form useful partnerships.

But the advice from the three-person panel of investors—Matthew Greenfield of Rethink Education; Jean Hammond of LearnLaunch, in Boston; and Brian Napack of Providence Equity LLC—was probably especially coveted by attendees, because it focused directly on what companies need to do and say to raise capital from outside sources.

Their advice was often blunt. Greenfield and Napack said that many of the pitches they hear are focused on portions of the K-12 market where there is already strong competition—or, that those pitches are far too dismissive of how school districts today operate and make decisions.

Greenfield said he sees a market replete with young companies determined to sell directly to consumers—companies that are also dismissive of the often-difficult task of selling directly to districts.

Too many venture capitalists, in turn, are biased in favor or pouring money into “unicorns” (startups with a valuation that tops $1 billion) and looking for the “moonshot” that will upend traditional K-12 constraints and prove wildly profitable.

“It results in a lot of investment going to people who are basically lying,” Greenfield said.

And it comes at the expense of ed-tech companies focused on solving real problems in schools, he added.

Napack said he had grown frustrated with companies that are disdainful of how schools end up choosing ed-tech—a process many industry officials see as slow, cautious and hopelessly bureaucratic. Those structures aren’t going away, he said, simply because businesses “think they’re going to disrupt them out of existence.”

Hammond said she looked for companies that were capable of more than disruption—she wanted them to be able to create markets for their products.

And all three panelists suggested that fledgling companies (and by implication, investors) would be wise to ask themselves a critical question: Are products helping schools with unmet needs or to overcome a seemingly intractable barrier? Or are those businesses just following the herd?

Both Napack and Greenfield questioned, for instance, whether the many companies promising “adaptive learning” were really offering systems that met that standard—or playing off an amorphous-yet-appealing concept.

All three of the panelists to one extent or another said they wished they heard more ideas from companies focusing on the “gaps” where K-12 schools are desperate for help—such as helping English-language learners and other subgroups of students.

When it comes to serving special populations, “that’s a real gap,” Napack said.

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A version of this news article first appeared in the Digital Education blog.